Resisting the New World Order: How China, India, Japan and Russia Established Alternative Trade and Investment Blocs

By T.J. Coles

20 April, 2019

This article is an excerpt from my new book, Privatized Planet: “Free Trade” as a Weapon Against Democracy, Healthcare and the Environment (2019, New Internationalist).

A report by Britain’s Royal Institute for International Affairs (Chatham House) acknowledges that “[g]lobalization is a brutal process. Societies accustomed to being at the top of the pyramid are being forced to make harsh structural adjustments” in order to keep their GDPs high; hence the Brussels- and City of London-led austerity policies of the last decade, which have killed literally thousands of people. The report concludes that “[i]t will be important … to engage rising powers inside existing international institutions as equal partners,” meaning that the Western elites hope to keep others in an illusion of equality. The US model favours economic isolation and military “containment.”

CHINA: NEW SILK ROAD

The only real “threat” that China poses to US elites is that it might pursue an independent course in global affairs, hence US elites’ massive military build-up in the Asia Pacific, or “pivot to Asia” as the Obama-Clinton administration called it.

According to a report from 2009 by the business-linked US Council on Foreign Relations (CFR), China has pursued a nationalistic agenda since the 1990s, challenging NATO and Japan, both of which are key US tools of influence. China’s alleged move towards independence is mixed, however; it has “enhanc[ed] its position with other major powers in the region, particularly Japan and the United States.” The Clinton-Obama-era Trans-Pacific Partnership, from which Trump withdrew, was designed in part to create a regional framework to which China would have to adhere. The CFR report notes that “[c]oping with China in a multilateral setting not only gives th[e]” smaller, regional nations (Vietnam, Singapore, etc.) “the power of collective bargaining but also enhances their security.” 

In 1991, a newly reformed China joined the Asia-Pacific Economic Cooperation (APEC). APEC was promoted in the late-1980s by Australia’s neoliberal champion, PM Bob Hawke. The US joined the APEC 21, as did Russia, and describes it as “the premier forum for facilitating economic growth, cooperation, trade and investment.” 

Founded in the 1960s, the Association of Southeast Asian Nations (ASEAN) contrasts APEC in that it initially excluded the USA. It has grown as a regional, mutual-interest bloc, which has succeeded in making the region a nuclear weapons-free zone, minus Japan, which probably hosts US nuclear missiles, and China, which developed nuclear weapons in the 1960s. China is not a member of ASEAN, but has associate status through various treaties. One of which is the ASEAN-China Free Trade Area signed in 2002. Members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

In 2001, China, Kazakhstan, Kyrgyzstan, Russia and Tajikistan formed the Shanghai Cooperation Organization (SCO). In 2017, both India and its supposed enemy, Pakistan, joined SCO. The project is designed to integrate countries in the region, cooperate on military affairs and expand infrastructure projects. In 2006, the APEC states entered into negotiating the Free Trade Area of the Asia-Pacific (FTAAP). The ASEAN-China FTA is a significant organization. In effect since 2010, it is the third largest economic bloc in world.

At the ASEAN Summit in Cambodia 2012, several countries entered into negotiations for a Regional Comprehensive Economic Partnership (RCEP); a kind of TPP designed to work in China’s favour. Other signatories are Australia, Brunei, Cambodia, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand and Vietnam. The agreement created one of the biggest economies in the world ($49.5 trillion) and included 3.4bn people. Both FTAAP and ASEAN-China FTA seem to have stalled with the advent of RCEP.

In 2013, President Xi Jinping announced China’s new Silk Road Economic Belt in a speech delivered in Kazakhstan. The supposed aim is to foster economic, trade and cultural cooperation across Eurasia and Southeast Asia. This is a rival to America’s Silk Road Strategy Act 1999, which sought to absorb some of the ex-Soviet states into the “free market”: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. In 2011, having occupied Afghanistan (a key route along the “Silk Road”) for a decade, Obama announced a New Silk Road of America to capture “South Asia’s … population of more than 1.6 billion,” including its “vast energy resources — including oil, gas, and hydropower” (US State Department).

INDIA

In addition to participating in some of the above trade and investment agreements, India’s economy has been largely Americanized since its adoption of “free market” principles in the 1990s.

After India kicked out the murderous British, the rulers pursued a closed economy until the early-1990s. Unlike the brutal Maoist model in neighbouring China, which had mixed effects ranging from genocidal levels of starvation to improved infant mortality and life expectancy, India’s poverty-induced death toll failed to bring about improvements in living conditions for hundreds of millions of people. With rivals like China gaining power and enemies like Pakistan gaining prestige, India decided to boost its GDP and join the “free market.” This included turning large parts of the country into sweatshops, call centres and assembly plants for American and European businesses. This was called “Shining India.” It also meant turning more of the agricultural sector into an export market, despite the fact that hunger and starvation affects one quarter of the population.

According to a report by the right-wing Brookings Institution, despite joining the WTO, India has not strengthened its rules on intellectual property. This means that it retains some controls over domestic technology patents and drugs. This kind of protectionism has dissuaded the US from investing as much in India as it does in, for instance, South Korea.

Despite some political tensions, such as a border dispute, trade between India and China boomed from under $3bn in 2000 to $66.57bn by 2012. In 2017, however, India boycotted a meeting of 30 heads of state who discussed participation in China’s Silk Road. The so-called China-Pakistan corridor passes through Kashmir, a region whose status remains unresolved since the Partition of India in 1947 and the founding of the Islamic Republic of Pakistan. India’s opposition to the Silk Road might affect its relations with China at the Asian Infrastructure Investment Bank and the New Development Bank—both of which receive substantial British investments, to the chagrin of the US, which sees the banks as a threat to its World Bank.

As for India’s relationship with Russia: Following the collapse of the Soviet Union, Kazakhstan suggested that the ex-Soviet states form a Eurasian Economic Union (EEU). It was not until 2015 that the EEU came into force. Its members are Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. In 2017, India announced plans to work with Russia on a “free trade” zone under the auspices of the EEU. The Economic Times (India) reports that such a deal could create a $37bn (or stronger) market.

JAPAN-EU: JEFTA

During WWII, the US slaughtered 3 million Japanese people, many with incendiary bombs, burning to death over 80,000 civilians in a single bombing raid (March 9-10, 1945). The new symbols of global power—atomic bombs—murdered a further 200,000 or so in Hiroshima and Nagasaki. Despite minor trade spats, like the ‘80s protectionism imposed by Reagan in the US to protect American corporations against superior Japanese vehicles, Japan has been largely subservient to US interests.

Today, Japan hosts approximately 23 US military bases. After WWII, America made Japan include a peace clause in its Constitution. This was to ensure that the bourgeoning US Empire would not be challenged by a resurgent Japan. When it suited America to use Japan as a proxy against a rising China, however, the Obama administration ordered Japan to revoke the peace clause in its Constitution, much to the opposition of the Japanese public. In 2006, Japan proposed forming a Comprehensive Economic Partnership for East Asia (CEPEA) with Australia, China, India, New Zealand and South Korea. At present, CEPEA has not been ratified.

The subservience of Japan’s political elite to the United States is so embarrassing that when PM Shinzo Abe (pronounced Abay) met with Donald Trump—in the USA, of course—Abe actually uttered these words:

“My name is Abe, but in the United States some people mistakenly pronounce my name as ‘Abe.’  But that is not bad, because even in Japan everybody knows the name of that great President, that a farmer and carpenter’s son can become a President.  And that fact, 150 years ago, surprised the Japanese, who were still under the shogunate rule [sic].  The Japanese opened their eyes to democracy. The United States is the champion of democracy.”

The US State Department refers to Abe as the kind of reformer it wants: easing of monetary policy to tackle low growth, “revisions to Japan’s legal code, and pro-active Japanese government policies to welcome [foreign direct investment] and promote corporate restructuring.” The “challenges” include Japan’s “insular and consensual business culture that is resistant to hostile mergers and acquisitions’ and ‘[l]abor practices that tend to inhibit labor mobility.” There is a conspicuous lack of interest in America, at least publicly, concerning the Japan-EU Free Trade Agreement (JEFTA). According to the European Commission’s trade assessment impact, JEFTA is a response to TPP and is designed to boost trade between the EU and Japan, particularly in the timber, motor vehicles and services sectors.

Europe’s trade assessment concludes that the main aim of JEFTA is to export more European-made products. One of the concerns, to give an example, is that Japan still retains some state controls over some of its services, despite Abe’s reforms. This is particularly bothersome in the public railway services (PRS) sector, which is a significant mode of transportation for Japanese people and thus a hindrance to the European automakers. “Ownership of PRS operators has been a critical topic of the EU-Japan FTA negotiations,” says the trade assessment report. “Concerns have been expressed about the possibility of more effective access to the sector given the former or current public ownership of PRS operators.” The report also envisages Japanese farmers requiring more skills in order to manage agriculture-related hi-technologies imported from Europe. The opening of “large-scale production plants” might result in “adjustments in labour” and the “closure or sell-off” of smaller plants, the report concludes.

RUSSIA

Turning finally to Russia, the only real challenge to US global domination:

Following US-led efforts to facilitate the collapse of the Soviet Union, the ex-Soviet states and Russia adopted so-called neoliberal free markets (i.e., US-led) in the early-1990s. But when an-ex KGB agent, Vladimir Putin, came along and dismantled many “free market” structures, the demonization process began. A US military study looks back on the Putin years and notes that under Boris Yeltsin, Russia was “economically depressed, militarily enfeebled, and dependent on Western assistance, giving the impression of being pliant and often subservient.” It laments that under Putin, there has been large-scale “de-privatization.” The report notes that Russian nationalism and nationalization is an assault on “Western values, such as respect for contracts and private property.” Putin’s nationalism is a “major obstacle to a more constructive and legal international order.”

In 2011, Russia and the US fought a mini trade war over the former’s accession to the WTO. The US Congress failed to adopt legislation granting Russia most-favoured nation status. Russia retaliated by blocking GATT Article XIII, prohibiting imports. Around the same time, Britain, France and the US began training and organizing Islamic extremists in Jordan and Turkey to invade Syria and depose Russia’s remaining Middle East ally, the government of Bashar al-Assad. The agenda is called the Broader Middle East and North Africa Initiative and involves demolishing much of the region in order to rebuild it along lines conducive to Euro-American interests.

Sponsoring a coup largely orchestrated by the US State Department and related private interests, America, Britain and NATO then moved into Ukraine, Russia’s next-door neighbour. US military reports preceding the events predicted that if NATO encroached on Ukraine, Russia would annex Crimea in an effort to save its navy port. This is what happened. As neo-Nazis and Ukrainian nationalists launched attacks against ethnic Russians primarily living in the East, Russia engaged in military action.

Shortly after the escalation of proxy wars between the three nuclear-armed powers (Russia vs. Britain and the US), America and the EU imposed sanctions. Obama signed executive orders sanctioning Russia. Ukraine is strategically significant because it is a key energy corridor, bringing Russian oil and gas to markets in Europe. In addition to the general policy of encircling Russia with missile systems in Turkey, Poland and Romania, the US and EU negotiated “free trade” deals with Ukraine during the reign of pro-Western leaders. The coup was, in part, an effort to make long-term investments in Ukraine safe for the US and European Union. In September 2014, the EU also tightened sanctions. 

CONCLUSION

The US elites and their commitment to “Full Spectrum Dominance … to protect U.S. interests and investment” don’t take kindly to challenges to their assumed right to dominate the world by force and shape it in their own interests. The major changes in world order are the result of frictions between those nations attempting to pursue independence and the US and its allies trying to keep them in line.

Dr. T.J. Coles is an Associate Researcher at the Organisation for Propaganda Studies and the author of several books, including Human Wrongs (iff Books) and Privatized Planet (New Internationalist).